Economic downturn: the view from Latvia

Latvia survived the dissolution of the Soviet Union and the disintegration of its industrial economy. Although its per capita annual income is now among the lowest in the EU, it has every intention of surviving the Great Global Crash of 2008. It just doesn’t know how

From whichever direction you approach Rezekne, the view is the same: fields, patches of waste ground, and workers’ allotments with brightly painted sheds. Then the silhouettes of industry loom: huge workshops, chimneystacks, cisterns and furnaces, with railway lines heading off in every direction. This seems like a centre of activity, but look closer and you see the buildings are abandoned and partially ruined. Industrial wasteland, so common in the former Soviet Union, is testament to how busy this place used to be. Finally you come to the houses, wide avenues and huge roundabouts that were built in the era of grand socialist parades.

Rezekne is a small town in eastern Latvia, 250km from the capital Riga and 60km from the Russian border. It has 36,000 inhabitants. The architecture is a hotchpotch: typical small white brick houses with corrugated iron roofs, traditional wooden houses dating back to the country’s first independence (1918-39), and solid Stalinist apartment blocks. Then there are the khrushchovka. identical throughout the former Soviet Union, and four- or five-storey buildings built in the 1980s but already so rickety they look like they are made of salvaged materials. There are also nondescript, recently knocked-up buildings used mainly for commercial purposes.

The town is spread over seven hills, with a river winding through. On one hill sits the ruined remains of an ancient fortress built by the Teutonic knights who subjugated the Baltic peoples in the 12th century. At the foot of these ruins Inga Balodis, a young teacher, bursts out laughing at a question about the current financial crisis: “We’ve been in crisis for almost 20 years! Industries and businesses have been closing down one after the other here ever since the USSR collapsed in 1991. If that wasn’t bad enough, there was the [Asian] financial crisis of 1998.”

The town never really recovered from the collapse of the Soviet Union and the abrupt closure of its principal industries. (...)